In 2023, the Chinese Government said that it would aim for an economic growth rate of 5% and a steady increase in both exports and imports. It was expected that higher output would be caused mainly by an increase in household spending, although this could also result in inflation. Another aim of the Chinese Government was to keep the unemployment rate at around 5.5%. China has an ageing population and an ageing labour force.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] income.
2. [1] interest rate.
3. [1] taxation.
4. [1] confidence.
5. [1] inflation rate / cost of living / prices / price.
6. [1] wealth.
7. [1] age.
8. [1] size of household.
9. [1] culture.
10. [1] advertising.
11. [1] quality.
12. [1] tastes.
13. [1] If more than two influences given, consider the first three.
14. [1] May be more experienced (1) may have high productivity / high efficiency / high skills (1).
15. [1] May make few mistakes (1) produce high quality products (1).
16. [1] May be reliable / easy to manage (1) punctual / carry out duties carefully (1).
17. [1] May need little training / may have received more training (1) keep firms' costs low (1).
18. [1] May be less likely to take maternity / paternity leave (1) less disruption to output / lower costs (1).
19. [1] May train young workers (1) pass on experience (1).
20. [1] May be less likely to leave job (1) in search of a better paid job (1).
21. [1] May keep older people healthy (1) lowering healthcare costs / increasing life expectancy (1).
22. [1] May increase the incomes of older people (1) reducing poverty (1).
23. [1] May increase the size of the labour force (1) encourage more older workers to seek employment / increase productive potential (1).
24. [1] Make older people more financially independent (1)reduce financial burden on family / government (1).
25. [1] May be prepared to work fewer hours (1) make firms more flexible (1).
26. [1] May be prepared to work for relatively low wages (1) in order to e.g. stay active (1).
27. [1] May relate better to older customers (1) a growing market in most countries (1).
28. [1] One mark each for each of two advantages identified and one mark each for each of two explanations.
29. [1] If more than two advantages given, consider the first three.
30. [1] There is an element of mix and match here with some explanations being linked with different identifications but do not reward the same point twice.
31. [1] Award increase in incomes rather than increase in wages.
32. [1] Household spending / consumer expenditure / consumption is a component of total demand (1) An increase in household spending would increase total demand (1).
33. [1] Total demand could exceed total supply (1) higher demand may encourage firms to raise prices (1) resulting in demand-pull inflation (1).
34. [1] An increase in household spending could encourage firms to invest / increase investment (1) increase their output (1) they may hire more workers (1) this may drive up wages (1) increase demand for raw materials / capital goods (1) raise price of raw materials / capital goods (1) increase costs of production (1) cause cost-push inflation (1) cause a wage price spiral (1).
35. [1] Formula AD = C + I + G + (X – M) can be taken as recognition that C is a component on total demand.
36. [1] Higher total (aggregate) demand and prices being pushed up can be shown on a diagram – one mark each.
37. [1] Reward but do not expect reference to the multiplier effect.
38. [1] may save scarce resources.
39. [1] may reduce shortages in the home market.
40. [1] may lower the exchange rate.
41. [1] may increase choice and quality of products in the home market.
42. [1] may import technology.
43. [1] may reduce firms' costs by importing low price raw materials and capital goods.
44. [1] may increase competition, making domestic firms more efficient.
45. [1] may increase revenue from import tariffs.
46. [1] may enable a country to consume more than it produces in the short term.
47. [1] may increase incomes abroad raising demand for this country's exports.
48. [1] may worsen the current account balance.
49. [1] may cause some domestic firms to go out of business.
50. [1] may reduce exchange rate.
51. [1] may reduce employment.
52. [1] may lower incomes / GDP per head.
53. [1] may lower living standards in the long term.
54. [1] will not want to import demerit goods.